What's Wales Worth? Growing exports despite recession
- 10 June 2013
- From the section Wales
The recession means that Welsh companies have to be ever more inventive and determined due to difficult world trade conditions.
According to the latest figures, the value of exports for Wales for the four quarters up to and including the first quarter of 2013 fell by £1,235 m compared with the previous four quarters.
But the Welsh government says the long-term trend in Wales is positive with exports increasing by 97.8% since 1999.
Four Welsh exporters explain how they have managed in the downturn.
The company based at Treforest, Pontypridd, produces a unique fabric shelter which when sprayed with water turns to concrete in just hours and is selling it to over 40 countries worldwide with exports making up 85% of its sales.
The canvas is used mainly in civil infrastructure and mining applications.
Last year the firm, which employs 20 people, won a £1.2m deal to Chile, to supply the material to a gold mine 4,000 metres high in the Andes where it was used to line water channels carrying off the glacial melt.
But there are more artistic uses - the canvas was exported to Iceland and used in a set design for Ridley Scott's film Prometheus.
Director Peter Brewin explained how they have multiplied exports since launching in 2008.
"Because our product is unique and has generated so much international interest we receive regular enquiries from companies wished to represent Concrete Canvas from all over the world," he said.
"Additionally, we regularly attend trade shows internationally to meet new distributors for markets that are particularly promising.
"Once we have an in-country distributor we support them heavily with training, technical support, marketing material and by participating with them at trade shows.
"We also facilitate transfer of knowledge and project case studies internationally between our distributors."
He said they had received Welsh government support including funding which helped them take part in trade missions to Japan and Australia, as well as advice and guidance on entering new markets like Brazil and Russia.
Mr Brewin said the company had maintained 100% turnover growth year-on-year since its launch and expected to maintain a comparable growth rate in the future.
"Consequently, we anticipate our exports increasing dramatically both in magnitude and as a proportion of overall turnover," he added.
"For all companies who add value in the UK and export overseas the recent decrease in the value of the pound relative to many currencies has helped to offset comparatively high labour, tax and regulatory costs.
"All of Concrete Canvas Ltd's tier one suppliers are UK-based, allowing us to add significant value within the UK throughout our supply chain.
"A fall in the pound adds significantly to our cost advantage compared to the cost of locally sourced concrete in many export markets.
"However, in most markets Concrete Canvas is sold based on its technical superiority as well as its cost advantages."
Tomos Watkin beers
Eleven years ago the Tomos Watkins Swansea brewery was in liquidation, but then Connie and her brother Phil Parry stepped in to buy it, turning it into a success story.
The company now employs 69 and has an annual turnover of about £10m, and according to chief executive Ms Parry, the beer is one of the fastest growing brands in Wales.
"We put all of our heart and soul into reinvesting in plant and equipment and staff training," she said.
"There is a uniquely Welsh quality to their products. From the names of the ales - Cwrw Idris , Cwrw Haf, Cwrw Braf - to the labels.
"Our Cwrw Braf for instance depicts a daffodil - our national flower.
"And our Magic Lager which was voted the best beer in Wales by Tesco."
Exports are a growing area and earlier this year, after taking part in a trade mission to China, the company shipped its first consignment of the hand-brewed beverage to Shanghai.
Now they have clinched a second order, double the size of their first.
"The first order was for a 20ft container. And this one if for a 40ft container," explained Ms Parry.
They also export to the United States, Hong Kong, and Spain but are concentrating on Australia and China, she said.
The firm first broke into the export market when they were invited to New York to take part in a Welsh Week.
"We will continue to explore new markets by taking advantage of the trade missions that are organised and subsidised by the Welsh government," said Ms Parry.
"We do see our exports increasing. At the moment they are a relatively small part of our turnover."
Ms Parry added that exchange rates are a factor for their American importer as they are paid for goods in sterling as opposed to dollars.
She added: "Our most surprising event has been the amount of companies that have contacted us for an order. We did win the World Beer Championship in Chicago.
"And we are consistently recognised in the brewing industry as one the forerunners of quality and excellence. So I think that this is major contributing factor."
Pembrokeshire-based Melin Tregwynt's distinctive Welsh woollen blankets have become increasingly visible in stores in the UK.
But company partner Eifion Griffiths said while home sales continue to do well, exports have fallen from about 30% of total turnover in 1997/98.
Mr Griffiths said the fall had been partly driven by the increasing value of the pound and fell to its lowest level during the financial problems of 2008.
After sales in the US and Europe declined, the company started to investigate Japan and found they were not so price-sensitive and more interested in the authenticity and story behind the blankets.
Mr Griffiths said: "This gave us an opportunity to begin to rebuild our exports.
"Recently despite the volatile exchange rate we have found exports increasing both in Europe and the US as well as Japan.
"We have begun to show in these markets again in the last few years. In addition, there are new opportunities in counties like China, Korea and Singapore."
He said exports are currently 10% of turnover which sounds like a big decrease but in fact turnover has more than doubled since the 1990s.
He also praised the help they have had to support their international export campaign from the Welsh government, but said one of the problems with the support mechanism is that it appeared to "be too driven by short-term political goals".
Mr Griffiths said: "The assembly strategy changes too often and this can confuse our overseas partners. We need to provide at national level, a consistent, well-thought through policy with a brand that develops but doesn't keep changing every year."
The unique Welsh flavour of the product was not something the emphasised in the beginning, Mr Griffiths said, because they felt that might limit its appeal.
But as times changed, they found that Welshness was a driver for their sales.
Selling Melin Tregwynt products to Japanese company Muji and having their directors visit the west Wales mill to see production was a surprise, Mr Griffiths added, as was working with Birkenstock providing fabric to be made into shoes.
Kamal Ali came up with the idea of manufacturing safety bags for the millions of pilgrims going on the Islamic pilgrimage of the annual haj and umrah after he gave up his design and technology teaching job and moved home to Newport, south Wales.
That was four years ago, swiftly followed by the setting up of the company two years ago.
It sells secure waist bags and other bags for Muslims who are making the pilgrimage to Mecca. It also works to supply airline kits with anti bacterial hand wash that does not contain alcohol.
The bags are manufactured in China where costs are cheaper and shipped back to the UK.
Hajj Safe currently exports about £15,000 to £20,000 of products a year, mainly to Europe, the US and Nigeria which Mr Ali says is a really big market with 100,000 haj pilgrims, to Indonesia and Australia.
"We would like to break into the Middle East, India and Pakistan markets," said Mr Ali, who has just returned from a trip to Morocco. "That would be brilliant news for us."
Most of the sales are direct to shops in the UK where transactions can be completed quickly but Mr Ali said he has secured a deal with a major luggage company which gives them access to all the UK's airports.
Mr Ali said while the firm is currently small he hoped to employ Welsh designers.
"I spent my childhood here and graduated from Newport university in fashion design," he said. " And I would like to help bring jobs into the area where I grew up."
Mr Ali said they had secure a good manufacturer in China for their products, but the costs of importing them were affected by exchange rates.
Initially, he said it had been a massive risk "giving £15,000 to this company in China and we hadn't seen a single product."
His biggest business surprise had been about working with wholesalers, who were taking about 60% of the recommended retail price of his goods.
"In two years' time I would like to be settled with 10 or more employees firmly situated in lots of markets in Europe," he added. "I would like to be a really known brand in the industry."